AEP Industries Inc. Reports Fiscal 2012 Results

Tue Jan 22, 2013 8:00am EST

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SOUTH HACKENSACK, N.J.,  Jan. 22, 2013  /PRNewswire/ -- AEP Industries Inc.
(Nasdaq: AEPI, the "Company" or "AEP") today reported financial results for its
fiscal year ended  October 31, 2012.

Net sales for fiscal 2012 increased  $177.7 million, or 18%, to  $1,152.5
million  from  $974.8 million  for fiscal 2011.  Excluding the impact of the
Company's  October 14, 2011  acquisition of Webster Industries ("Webster"), the
increase was the result of an increase in sales volume of 5% for fiscal 2012,
combined with a 1% increase in average selling prices.  The acquisition of
Webster added an additional  $114.3 million  in net sales during fiscal 2012.

Gross profit for fiscal 2012 was  $182.7 million, an increase of  $54.0 million,
or 42%, compared to the prior fiscal year. Excluding the decrease of the LIFO
reserve change of  $11.6 million  year-over-year and  $12.2 million  in
additional gross profit contributed from Webster, gross profit increased  $30.2
million  primarily due to increased sales volumes and improved material margins.

Operating expenses for fiscal 2012 were  $126.8 million, an increase of  $23.3
million, or 23%, compared to the prior fiscal year. Webster incurred  $14.0
million  in operating expenses during fiscal 2012, an increase of  $13.4 million
 from the prior year, which included only two weeks of operations due to the
timing of the acquisition. Without the Webster impact, operating expenses
increased  $9.9 million  during fiscal 2012 primarily due to an increase in
selling and delivery costs as a result of the increase in volumes sold, an
increase in share-based compensation costs associated with the Company's stock
options and performance units and increased provisions related to employee cash
performance incentives.  

"We are very pleased with our 2012 performance highlighted by increased organic
sales volume and profitability per pound," said  Brendan Barba, Chairman,
President and Chief Executive Office of the Company.  "While the economic
environment continues to be uncertain, AEP stands out as distinctively able to
keep moving to the future.  We expect the acquisition of Webster and our 
November 2012  acquisition of the equipment and customer list from Transco
Plastic Industries will bolster our product offerings and expand our
manufacturing capabilities. We are very excited to continue our solid momentum
in fiscal 2013 and deliver increasing value to our shareholders."

Interest expense for fiscal 2012 was  $19.1 million, a decrease of  $0.1 million
 as compared to the prior fiscal year.  Included in the prior fiscal year was
interest expense related to the final settlement of the 2013 Notes.  Without
this item, interest expense increased  $1.7 million  for fiscal year 2012,
resulting primarily from higher borrowings and interest rates payable under the
Company's senior notes due 2019.

Net income for fiscal 2012 was  $23.2 million, or  $4.16  per diluted share, as
compared to  $12.4 million, or  $2.09  per diluted share in fiscal 2011. Fiscal
2011 included a gain on bargain purchase of the Webster business of  $8.3

Adjusted EBITDA (defined below) was  $84.2 million  in fiscal 2012 as compared
to  $59.3 million  in fiscal 2011.

Reconciliation of Non-GAAP Measures to GAAP

The Company defines Adjusted EBITDA as net income (loss) before discontinued
operations, interest expense, income taxes, depreciation and amortization,
changes in LIFO reserve, other non-operating income (expense) and non-cash
share-based compensation expense. The Company believes Adjusted EBITDA is an
important measure of operating performance because it allows management,
investors and others to evaluate and compare its core operating results,
including its return on capital and operating efficiencies, from period to
period by removing the impact of its capital structure (interest expense from
its outstanding debt), asset base (depreciation and amortization), tax
consequences, changes in LIFO reserve (a non-cash charge/benefit to its
consolidated statements of operations), other non-operating items and non-cash
share-based compensation. Furthermore, management uses Adjusted EBITDA for
business planning purposes and to evaluate and price potential acquisitions. In
addition to its use by management, the Company also believes Adjusted EBITDA is
a measure widely used by securities analysts, investors and others to evaluate
the financial performance of the Company and other companies in the plastic
films industry.  Other companies may calculate Adjusted EBITDA differently, and
therefore the Company's Adjusted EBITDA may not be comparable to similarly
titled measures of other companies.  

Adjusted EBITDA is not a measure of financial performance under U.S. generally
accepted accounting principles (GAAP), and should not be considered in isolation
or as an alternative to net income (loss), cash flows from operating activities
and other measures determined in accordance with GAAP.  Items excluded from
Adjusted EBITDA are significant and necessary components to the operations of
the Company's business, and, therefore, Adjusted EBITDA should only be used as a
supplemental measure of the Company's operating performance.  

The following is a reconciliation of the Company's net income, the most directly
comparable GAAP financial measure, to Adjusted EBITDA:

                                           Fiscal 2012                  Fiscal 2011                
                                           (in thousands)               (in thousands)             
 Net income                                $                  23,152    $                  12,388  
 Provision for taxes                       14,248                       2,083                      
 Interest expense                          19,077                       19,178                     
 Depreciation and amortization expense     22,828                       21,751                     
 (Decrease) increase in LIFO reserve       (1,181)                      10,350                     
 Gain on bargain purchase of a business    (17)                         (8,313)                    
 Other non-operating income                (812)                        (105)                      
 Non-cash share-based compensation         6,893                        1,919                      
 Adjusted EBITDA                           $                  84,188    $                  59,251  

The Company invites all interested parties to listen to its fiscal 2012
conference call live over the Internet at  on  January 23, 2013,
at  10:00 a.m. ET  or by dialing 888-802-8577 for domestic participants or
404-665-9928 for international participants and referencing passcode 86086576. 
An archived version of the call will be made available on the Company's website
after the call is concluded and will remain available for one year.

AEP Industries Inc. manufactures, markets, and distributes an extensive range of
plastic packaging products for the consumer, industrial and agricultural
markets.  The Company has manufacturing operations in  the United States  and 

Except for historical information contained herein, statements in this release
are forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. 
Forward-looking statements involve known and unknown risks and uncertainties
which may cause the Company's actual results in future periods to differ
materially from forecasted results. Those risks include, but are not limited to,
risks associated with resin and product pricing, volume, resin availability, the
integration of Webster Industries and Transco Plastics Industries, the
implementation of the final phase of a new operating system, our liquidity and
market conditions generally, including the continuing impacts of the U.S.
recession and the global credit and financial environment. Those and other risks
are described in the Company's annual report on Form 10-K for the year ended 
October 31, 2012, to be filed with the Securities and Exchange Commission (SEC),
copies of which are available from the SEC or may be obtained from the Company.
Except as required by law, the Company assumes no obligation to update the
forward-looking statements, which are made as of the date hereof, even if new
information becomes available in the future.

 AEP INDUSTRIES INC.                                                             
 CONSOLIDATED STATEMENTS OF OPERATIONS                                           
 FOR THE YEARS ENDED OCTOBER 31, 2012 and 2011                                   
 (in thousands, except per share data)                                           
                                                      2012          2011      
 NET SALES                                            $1,152,535    $974,792  
 COST OF SALES                                        969,792       846,070   
 Gross profit                                         182,743       128,722   
 OPERATING EXPENSES:                                                          
 Delivery                                             52,989        44,251    
 Selling                                              41,404        35,371    
 General and administrative                           32,424        23,853    
 Total operating expenses                             126,817       103,475   
 OTHER OPERATING INCOME (EXPENSE):                                            
 Loss on sales of property, plant and equipment, net  (278)         (16)      
 Operating income                                     55,648        25,231    
 OTHER INCOME (EXPENSE):                                                      
 Interest expense                                     (19,077)      (19,178)  
 Gain on bargain purchase of a business               17            8,313     
 Other, net                                           812           105       
 Income from operations before provision for          37,400        14,471    
 income taxes                                                                 
 PROVISION FOR INCOME TAXES                           (14,248)      (2,083)   
 Net income                                           $23,152       $12,388   
 BASIC EARNINGS PER COMMON SHARE:                                             
 Net income per common share                          $4.20         $2.10     
 DILUTED EARNINGS PER COMMON SHARE:                                           
 Net income per common share                          $4.16         $2.09     

 Contact:  Paul M. Feeney                     
           Executive Vice President, Finance  
           and Chief Financial Officer        
           AEP Industries Inc.                
           (201) 807-2330                     

SOURCE  AEP Industries Inc.

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